CZN Comments on Final Arguments

September 16, 2011 Chuck Hubert Environmental Assessment Officer Mackenzie Valley Review Board Suite 200, 5102 50th Avenue, Yellowknife, NT X1A 2N7 Dear Mr. Hubert RE: Environmental Assessment EA0809-002, Prairie Creek Mine Comments on Final Arguments Canadian Zinc Corporation (CZN) is pleased to provide the attached comments on the Final Arguments submitted by parties at the conclusion of environmental assessment EA0809-002. Technical replies are provided, where necessary, by stating CZN’s position with respect to recommendations made. Where recommendations are unchanged from Technical Reports, the Review Board is directed to CZN’s comments on Technical Reports in Attachment 1. The contents of Attachment 1 should be read first since context is provided for some of our responses to the Final Arguments. Please note that our comments on Technical Reports contain no new information, and no timeline was provided by the Review Board for their submission. Also attached is a final commitments table (Table 1), and the curricula vitae of the main individual consultants who provided deliverables for the environmental assessment process. Yours truly, CANADIAN ZINC CORPORATION David P. Harpley, P. Geo. VP, Environment and Permitting Affairs Suite 1710-650 West Georgia Street Vancouver, BC V6B 4N9 Tel: (604) 688-2001 Fax: (604) 688-2043 E-mail: [email protected], Website: www.canadianzinc.com COMMENTS ON PARTY FINAL ARGUMENTS Aboriginal Affairs and Northern Development Canada (AANDC) Water Management and Storage Recommendation 2: Final selection of an additional water storage option must be done in conjunction with the determination of Site Specific Water Quality Objectives for Prairie Creek. If increased capacity associated with construction of an additional pond provides for the ability to meet Reference Condition Approach benchmarks as defined within the derivation process, that option must be selected and implemented. The Review Board is directed to CZN’s submission dated September 16, 2011 (“AANDC’s Final Submission and Proposed Site-Specific Water Quality Objectives”). In that submission, we propose a Framework (Attachment 1) for selecting final Site Specific Water Quality Objectives (SSWQO’s). CZN has committed to provide additional ‘live’ water storage capacity. In the Framework, we state that the additional water storage option that results in lower predicted receiving water concentrations will be preferred, provided the option is clearly superior to the alternative option in terms of predicted concentrations and reduced risk. We are not opposed to adopting the best option, provided it produces a significantly better result. We do not wish to be forced to adopt the best option, assuming we are already within risk-based indicators of no significant ecosystem change. The construction and operation of the additional facility would incur unnecessary and significant costs if it is only marginally better than the alternative, irrespective of the ability to meet Reference Condition Approach (RCA) benchmarks. Therefore, we respectfully ask the Review Board to endorse our Framework and deny this recommendation. AANDC produced a similar Framework (their Appendix C). AANDC and CZN collaborated on the broad development of the Framework, and were successful in resolving nearly all of our respective issues. Some differences remain. However, when the results of RCA benchmark confirmation, further process water treatment testing and ecological risk assessments (ERA) are available, the differences may disappear. Until those results are available, we wish to retain some flexibility so that reasoned and balanced decisions can be made regarding costs, risks and environmental protection. Site-Specific Water Quality Objectives Recommendation 1: AANDC recommends that the Developer be required to establish and present Site Specific Water Quality Objectives for the Prairie Creek Mine, prior to the licensing phase, using the process defined within Appendix C. The process referred to is AANDC’s Framework for deriving SSWQO’s. As noted above, CZN has provided a similar but slightly different Framework. Recommendation 2: AANDC recommends that if, following pilot testing per the recommendations in the Developer’s Desktop Study of Water Treatment Options, it is identified that Reference Condition Approach based Site Specific Water Quality Objectives can be readily achieved, then that treatment option(s) must be implemented during operations Our response is the same as for additional water storage in Recommendation 2 above. Recommendation 3: AANDC recommends that any ecological risk assessments conducted in accordance with the Site Specific Water Quality Objectives process follow the Terms of Reference as provided in Appendix D. As for the Framework to derive SSWQO’s, AANDC and CZN collaborated on the development of a Terms of Reference for ERA’s. Our version is very close to AANDC’s, and is provided in Attachment 2 of our September 16, 2011 letter. Recommendation 4: AANDC recommends that Effluent Quality Criteria (i.e. Maximum Grab Concentrations) must be back calculated from Site Specific Water Quality Objectives based on the Developer’s best estimate inflow prediction. (Consistent with Recommendation SSWQO/EQC #2, at June 24, 2011 Public Hearing) In our proposed Framework for deriving final SSWQO’s, we acknowledge that Effluent Quality Criteria (EQC) should be back calculated from the SSWQO’s. However, CZN has been consistent through the EA process in stating that the discharge approach which provides the greatest operational flexibility, and results in the lowest impacts on the receiving environment, is a load-based approach. Operational flexibility occurs because greater loads can be discharged when receiving water flows are high, and are not unnecessarily constrained by concentration limits, except those that prevent the discharge of acutely toxic water. Impacts are lowest because loads are reduced during low flow periods, ensuring that receiving water concentrations do not change significantly by season. Therefore, we agree with the recommendation provided the reference to “Maximum Grab Concentrations” is omitted. Recommendation 5: AANDC recommends that CZN must not discharge effluent that has concentration(s) above the stipulated Maximum Grab Concentrations in the Water Licence. Consistent with our response to Recommendation 4 above, if this recommendation is reworded as follows, we would agree: “AANDC recommends that CZN must not discharge effluent that exceeds the limits stipulated in the Water Licence.” Recommendation 6: AANDC recommends that any discharge from the end-of-pipe must meet the Maximum Average Concentrations as stipulated by the Surveillance Network Program in the Water Licence. Detailed instructions on the method and timing for sampling, deriving and reporting regulated average concentrations should be specifically outlined within the SNP. Again, consistent with our response to Recommendation 4 above, if this recommendation is reworded as follows, we would agree: “AANDC recommends that any discharge from the end-of-pipe must meet the limits stipulated in the Water Licence. Detailed instructions on the method and timing for sampling, deriving and reporting regulated discharges should be specifically outlined within the Surveillance Network Program (SNP).” Our understanding is that end-of-pipe limits are stipulated in the Water Licence, not the SNP. The SNP commonly sets out the method and timing of sampling, and required measurements and analyses. Tailings Management Recommendation 1: All flotation tailings to be placed underground as paste backfill. Paste backfill should be comprised of a 5:1 overall ratio by weight of flotation tailings to DMS. No mine waste is permitted to remain on the Prairie Creek floodplain after closure. Before responding to this recommendation, it is appropriate to review CZN’s approach to mine development. The Prairie Creek Mine as it exists today is a legacy site. Mine drainage flows out of the lower portal by gravity. In the absence of mine development and the implementation of a robust mine closure solution, the drainage will have to be treated in perpetuity. This also means a human presence will be required on site in perpetuity. Cadillac’s mine development proposal was to permanently store fine tailings on the Prairie Creek floodplain. Coarse tailings would be placed underground, but it is not clear that this would have prevented long-term mine drainage. When CZN considered its mine development proposal, it was decided that the responsible thing to do was to avoid permanent disposal of mine waste on the floodplain, and to backfill the mine workings so that treatment in perpetuity can be avoided. This decision is associated with great cost in terms of the paste backfill process. In the preamble leading to this recommendation, AANDC makes the following comment: “Previously, efficiencies and economics were key considerations for the proposed paste backfill design”. With respect, it has always been CZN’s intention to place all of the flotation tailings underground, and economics have never been a key consideration. In response to the recommendation, CZN has committed to place all floatation tailings underground, and not to leave any paste on surface or in the Waste Rock Pile on mine closure. We disagree that paste backfill should be comprised of a 5:1 overall ratio by weight of flotation tailings to DMS. Depending on mine development constraints, this ratio may need to be raised or lowered. The first

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